SEC political spending snub upsets Democrats

The Securities and Exchange Commission’s decision to remove a political spending rule from its annual agenda has irked House and Senate Democrats pushing the proposal, and the lawmakers said they will continue to press the agency to act.

Supporters of the rule want the SEC to force public companies to disclose their political spending, arguing investors have a right to know how their money is being used and that putting the requirements in place is a straightforward task that the agency can handle amid other responsibilities.

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The proposal has proved controversial and is opposed by industry groups and congressional Republicans. SEC Chair Mary Jo White, who took office in April, has said the rule is not a top priority for the agency, arguing it needs to focus on completing rule makings required by the 2010 Dodd-Frank law and the 2012 JOBS Act.

“I certainly hope that the SEC has not been recaptured by the very entities they are supposed to oversee,” Rep. Michael Capuano (D-Mass.), a leading advocate of the proposal, said in a statement Monday. “I will urge the SEC to pursue this shareholder protection proposal as strongly as I possibly can. Maybe the ‘corporations are people’ crowd has won another round, but the fight is not over.”

The rule is not required by law, but it has been the subject of thousands of public comments since a group headed by Harvard and Columbia law professors petitioned the agency for the disclosure requirement in August 2011. The push for the rule gained steam after the controversial 2010 Citizens United ruling allowed election spending by corporations.

Last year, the proposal appeared on an annual agenda the SEC submitted to the White House Office of Management and Budget — a move that was cheered by its supporters who offered it up as evidence the agency was taking the idea seriously.

But White threw cold water on the idea during some of her first congressional appearances while under questioning from Republicans, who said they worried it would be used by the government to intimidate political enemies, telling lawmakers that a rule was not being drafted. White’s predecessor, Mary Schapiro, said in an interview in July that she added it to last year’s agenda at the request of SEC Commissioner Luis Aguilar, who on Monday declined to comment on its removal from this year’s document.

“The list represents our best estimate of what will be ready for the commission’s consideration by fall of 2014,” said SEC spokesman Kevin Callahan.

The 38-rule SEC agenda that the OMB posted last week is prepared by staff and subject to approval by SEC commissioners.

While the agenda is not binding, Sen. Robert Menendez (D-N.J.) said Monday that the SEC should be leading the way on the issue “rather than abdicating their responsibility.”

Menendez has introduced a bill that would require the SEC to implement the rule. Sen. Elizabeth Warren (D-Mass.) supports the bill but said in October that legislation wasn’t needed and urged supporters to “harass” the SEC to write the rule.

“I hope they’ll reconsider because failure to address this issue would be a step back from the SEC’s proactive agenda to protect investors,” Rep. Chris Van Hollen (D-Md.) said in an interview Monday.

While White, a political independent, has made clear since her confirmation that the Dodd-Frank and JOBS Act rules are top priorities, she also has recently questioned calls for the agency to require more corporate disclosures in general.

The SEC agenda omits the redrafting of a court-vacated Dodd-Frank rule requiring energy and mining companies to disclose their payments to foreign governments.

Rep. Maxine Waters of California, the top Democrat on the Financial Services Committee, said Tuesday she was disappointed that the rule and the political spending proposal were absent from the agenda.

“I strongly believe the SEC should make these important rules a priority in the coming year,” she said.

Sen. Ben Cardin (D-Md.), who co-authored the foreign government disclosure requirement in Dodd-Frank, said the omission was not surprising because it should be easy to amend.

“We fully expect the rule to be finalized in 2014,” he said.

Supporters of more disclosure rules, however, said they are worried about the two rules dropping off the agency’s agenda.

“They are de-prioritizing the disclosure demands of investors,” Public Citizen Congress Watch Director Lisa Gilbert said Monday. “We hope they realize that those types of rules are critical for democracy and the rights of investors in the marketplace.”